Its official – Midland Mainline and Transpennine electrification plans put on hold by Transport Secretary

Published: 26th June 2015

Government blames Network Rail for project cost and time overruns – but who is really to blame?

The current phase of rail investment is pretty much unprecedented as the last such investment phase was announced 60 years ago in the 1955 ‘Modernisation Plan’. This eventually brought the end of steam, dieselisation and some electrification projects but massive line closures as well.

The previous largest railway investment era was a century earlier in Victorian times when investors flocked to put money into railway construction.

History has now repeated itself so far as the 1955 plan is concerned (apart from closures) with the announcement by Transport Secretary, Patrick McLoughlin that various high profile projects are to be ‘paused’. The reason offered is that Network Rail (NR) is to blame for underachieving and overspending, but just how true is this?

Privatised railway history

The railways were officially privatised on 1st April 1994 when Railtrack assumed control of the rail network and was set up to maintain a steady state railway at best, but a slow decline was expected.

The government bankrupted Railtrack after seven years and were succeeded by Network Rail in 2003. They signed up to a five year spending and funding budget commencing in April 2014 with The Office of Rail and Road Regulation (ORR) with specified outputs such as electrification of the Great Western Mainline (GWML) and the Midland Main Line (MML). This much lauded (before the election by the Government) £38 billion investment correctly was welcomed after decades of managed decline by successive governments.

In return for funding, the ORR agrees with NR performance targets so far as punctuality, renewals and upgrades are concerned meaning that they have to satisfy ORR, the DfT and train companies. All have different priorities and contractual obligations to deliver but and all depending 100% on NR’s efforts.

Slow moving company and Objectors

NR therefore dances to its funder’s tune and the DfT and the rail industry knows that NR is a very slow-moving beaurocratic organisation. It is not helped when the DfT change a project specification resulting in time delays and increased costs but NR cannot publically say this.

Every project attracts Objectors who have to be dealt with, no matter how minute or irrelevant it may be and the Transport Secretary has blamed local councils for delaying Planning Consent for delaying some projects. He also says that NR should have foreseen this but this is a curious statement given he is a Cabinet member and presumably has access to other parts of the Government to ‘have a word’ about this!.

Competing pressures between Government Departments

NR has been a Government department for just under a year and now negotiates with The Department for Transport over franchise specifications with tight specifications for the provision of train services. So those who call for a railway renationalisation are too late!

This means that you have two government departments negotiating with each other but only one is regulated by ORR which brings uneven pressures on NR to deliver upgrades to funders while keeping the network running carrying record numbers of passengers and freight.

To do this they have to provide reliable and often upgraded infrastructure to deliver the train service specification agreed with franchises. The infrastructure has to carry more and more trains running across a greater timespan of the day than for decades.

The Midland Main Line

The Midland Main Line was pretty much doomed to failure because the infrastructure upgrades were ordered by the DfT to be delivered before electrification was to take place. This was a deliberate Government decision which amazed railway professionals working on the project as it was ordered for purely political reasons.

This is a more expensive way forward making in essence two projects out of one creating a longer and more expensive way upgrading the line plus double the disruption to passengers. Was this decided to sway voters at the election one has to wonder!

Project resources

Another issue is that of resources. The current phase of rail upgrades means that there are simply not enough experienced staff or contractors to carry out the works. Many are leaving the industry because of the pension ruling of capping the lifetime allowances and so are retiring at 55 to avoid a potential hefty tax bill. Their skill and experience is lost to the industry or becomes a very expensive commodity as they return as consultants.

Patrick Mcloughlin has said that a review will take place NR’s structure and how it works. If this means that another re-organisation will take place, this will further hinder progress as staff get used to new roles and organisational processes.

Major projects take decades to come to fruition. The Thameslink and Crossrail projects for example, are both over 30 years old from when they were first considered. They have had to jump legal hurdles, change of Governments and associated policy plus obtaining funding.

NR’s costings seem to be wrong but was this due to having to make a five year funding bid starting last year to ORR before the projects had been fully scoped out?

DfT procurement policy

The DfT has also acted as procurement agents for new fleets of trains but the deals were so complicated, they held up the projects as NR did not know what it was building for. This is why the Great Western electrification has been given priority for completion as the new Hitachi trains are being tested now.

Trans Pennine

The Trans Pennine Electrification between Manchester. Leeds and York has also been ‘paused’ as with the MML project. This line has up to four trains an hour but they are only three carriages and frequently heaving and do not offer fast journeys. This was the basis of The Chancellor’s ‘Northern Powerhouse’ election pledge which has now been binned.

Politics and the West Coast Main Line

Under Government pressure a decade ago, the 140mph WCML upgrade was declared complete by Railtrack with the introduction of the new tilting train timetable. Except it was reduced to a 125mph railway still using old infrastructure in key locations such as Watford and Bletchley where upgrades have now been carried out now.

They said:

Patrick McLoughlin wants NR to stay within their spending allowance and wants them to concentrate efforts on getting it right. But is he shifting the blame away from his DfT given NR is a Government Department?

He also said that ‘To improve performance we need to invest and we need good management. Mark Carne has strengthened his team and a structure for improvement’.

McLoughlin says that these problems could and should have been foreseen by Network Rail but perhaps so should the Government given he cites local Authority planning decisions as a factor in delaying schemes.

There is a further lack of accountability looming as the role of the Public Members, defacto shareholders, will end so no public questioning will be possible.

Network Rail Chief Executive, Mark Carne said: On the big items like electrification and capital projects, it was always part of the regulatory process that the costs and programme would be revisited as projects became properly defined. Detailed project costs have been higher than assumed at the earliest stages of definition. As a result, the total enhancement programme cost now exceeds the available five-year budget.

Mark Carne added “I recognise that these delays will cause disappointment for some passengers for which I can only apologise. I welcome the fact that the Transport Secretary has asked Sir Peter Hendy to work with me and my team to develop proposals for re-planning the programme over the next few months.”

New Chairman

Sir Peter Hendy’s appointment as the new NR Chairman will bring a transport expert to the helm which should be a benefit as the NR board lacks long term transport experience.

Despite the bad news, it must be remembered that Britain now has the safest and fastest growing passenger network in Europe while trying to expand the system.

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